Air Berlin seeks damages from Etihad - Rheinische Post

FRANKFURT (Reuters) - German airline Air Berlin <AB1.DE> is demanding damages from its part-owner Etihad Airways for letting it become insolvent and it hopes for payment of at least 10 million euros (£8.94 million), Air Berlin's administrator told a German newspaper.

"We are in negotiations with Etihad and hope to reach a general settlement soon. We are hoping for a two-digit million euro sum," daily Rheinische Post on Saturday quoted administrator Frank Kebekus as saying.

Air Berlin, Germany's second-biggest airline after Lufthansa, filed for bankruptcy in August after Etihad, the owner of almost 30 percent of Air Berlin, withdrew funding following years of losses.

Etihad was not immediately available for comment.

The Abu Dhabi-based carrier has been reviewing its European investments after they failed to yield the profits expected. Alitalia [CAITLA.UL], another of Etihad's investments, is also in administration and is seeking bidders.

Air Berlin's planes have been kept in the air by a 150 million euro government loan, which Kebekus said the carrier could repay with the proceeds from a sale of assets to larger rival Lufthansa <LHAG.DE> agreed last week.

"We will in all likelihood repay the loan including interest of around 10 percent," Kebekus said.

Holders of more than 600 million euros worth of outstanding Air Berlin bonds will meanwhile likely lose out, he said, as their claims would only be considered after many others, including Air Berlin's staff, had been paid.

Air Berlin is due to cease operating flights by Oct. 28 at the latest, and Kebekus said that around 4,000 workers could then lose their jobs unless a transfer company was set up that would temporarily employ them until they found work elsewhere.

(Reporting by Maria Sheahan; Additional reporting by Sylvia Westall; Editing by Stephen Powell)